Gains from Deep Trade Integration: The Case of the Transatlantic Trade and Investment Partnership

17  September 2014    4:00 pm

Gabriel Felbermayr, Ifo Center for International Economics, LMU

In cooperation with:
Research Centre International Economics (FIW) 


wiiw, Rahlgasse 3, 1060 Vienna, lecture hall (entrance from the ground floor)


Mr. Felbermayr presents together with Rahel Aichele and Inga Heiland.

Since July 2013, the EU and the US are negotiating a comprehensive and ambitious agreement that has the objective of fostering transatlantic trade and investment. Simulations of the potential economic impact of such a Transatlantic Trade and Investment Partnership (TTIP) have led to diverging results due to differences in methods and in scenarios. In this paper, we propose to structurally estimate a new multi-industry quantitative trade model and to simulate the trade and welfare effects of a fully implemented TTIP. In doing so, we seek consistence with existing CGE-based approaches, but we apply a top-down approach to the treatment of non-tariff measures (NTMs). We find welfare effects that are comparable to those obtained in structurally estimated single-sector models and that are substantially higher than those obtained when using a bottom-up treatment of NTMs.

Keywords: Structural gravity, free trade agreements

JEL classification: F13, F14, F17